By: Vitor Ferrari and Ivan Kubala

Authored by Senator Irajá (PSD-TO), Bill No. 2963/2019 facilitates the purchase, ownership and leasing of rural properties in Brazil by foreign individuals or companies, since it provides for the waiver of the need for authorization or license for foreigners to acquire rural properties whose area does not exceed 15 fiscal modules – the value of the fiscal module is dictated by Incra and varies between 5 and 110 hectares, depending on the municipality in which the rural property is located.

However, the PL is not a carte blanche for land to be purchased by foreigners: there is a limit of 25% of the surface area of each municipality, and in the case of business corporations formed by foreigners, the limit is 10% of the total area of the municipality.

According to Senator Irajá, the proposal is extremely important, as the country has failed to receive at least half a billion reais in foreign investment in the agribusiness sector due to these barriers.

However, the PL, which has already been approved in the Senate, is stagnant in the Chamber of Deputies, where it awaits the creation of a special committee by the Board of Directors, and is now ready to enter the voting agenda in the Plenary..

Unfortunately, there is no forecast of when the vote will take place, given that the official website of the Chamber of Deputies does not provide a forecast of voting dates.

While there is no legal provision for the Bill to be voted on, much less when it will come into effect, if approved, foreign investors are using another means to invest in Brazilian rural properties: FIAGROs – real estate funds focused on Brazilian agribusiness, created with the aim of financing agribusiness, supporting rural producers and, with this, improving the sector.

There are 2 main types of these funds: exclusive and non-exclusive.

The FIAGROs in the first group are the fastest and least bureaucratic way for large investors to invest in national agribusiness. In these funds, a single investor is the shareholder, which allows him to manage the fund according to his interests, buying and selling the properties that suit him; he must appoint a manager who will manage the portfolio.. It must be explained that the international investor would not be the owner of the land, but merely a shareholder in the fund, which effectively holds possession of the land.

The other examples are non-exclusive funds. Most are traded on the stock exchange (B3) and do not require qualified investors (those with more than 1 million in assets), increasing the range of possibilities for investments in the agribusiness national by foreigners.

The creation of these funds increased Brazil's attractiveness to investors, as it opened up the possibility of investments in national agribusiness, the country's strong point, being a specialty and the national differential on the international scene.

With the collaboration of Luis Felipe Simão